Foreign debt rises to $147 billion

MANILA, Philippines — The country’s outstanding external debt climbed to $146.74 billion as of end-March, driven mainly by fresh borrowings from the national government and local banks, according to the Bangko Sentral ng Pilipinas (BSP). 

The latest figure is 6.6 percent higher than the $137.64 billion posted in the fourth quarter of 2024, and 14 percent more than the previous year’s  $128.76 billion.  

Despite the increase, the BSP said the Philippines’ external debt remained at a prudent level, equivalent to 31.5 percent of gross domestic product (GDP). While higher than the 29.8 percent recorded a quarter earlier, the central bank said this ratio remains “indicative of the country’s capacity to meet foreign obligations.”

“The rise in external debt during the quarter was mainly due to the national government’s fundraising activities to support infrastructure and budgetary needs, as well as offshore borrowings by banks to manage liquidity and trading requirements,” the BSP said.

In the first quarter alone, the national government raised $5.06 billion through global bond issuances and official development assistance from foreign institutions. Banks, on the other hand, accessed short-term funding from offshore markets.

Year-on-year, the government’s bond sales reached $7.83 billion, while banks borrowed $6.14 billion abroad.

The country’s short-term external debt – measured based on remaining maturity – stood at $32.67 billion. This remains adequately covered by gross international reserves (GIR), which totaled $106.67 billion as of end-March. The cover ratio stood at 3.27 times, providing a healthy external liquidity buffer despite a gradual decline in recent years.

Meanwhile, the debt service ratio, an indicator of the country’s ability to repay foreign obligations, improved to 8.4 percent from nine percent in the same quarter of 2024. The BSP attributed this to lower principal and interest payments by resident borrowers during the period.

The external debt stock includes all borrowings by Philippine residents from non-residents, and is closely monitored to ensure that the country maintains its creditworthiness and financial stability.